Xebec and Fonds de solidarité FTQ launch an investment fund Xebec and Fonds de solidarit FTQ launch an investment fund to increase renewable natural gas production in Quebec
MONTREAL, (QC), June 1st, 2020 – Xebec Adsorption Inc. (TSXV: XBC) (“Xebec”), a global provider of clean energy solutions, and Fonds de solidarit FTQ (the “Fonds”) are proud to announce the creation of the GNR Qubec Capital L.P. investment fund. With an initial capitalization of $20 million, this new investment vehicle aims to increase renewable natural gas (RNG) production in Qubec. Partners, particularly from the agricultural and municipal sectors, will have access to the capital and expertise needed to develop and operate efficient facilities to treat organic waste. The creation of a fund of this type for renewable natural gas projects is a first in Qubec.
Xebec and the Fonds will each initially invest $10 million into the partnership. Over time, Xebec and the Fonds expect that the partnership could receive an aggregate $100 million in equity capital from Xebec, the Fonds and other investors. Xebec and the Fonds’ initiative could, with a 75:25 debt to equity ratio, fund 12 to 15 renewable natural gas projects in Qubec with an aggregate investment of $400 million over the next decade. The general partner, GNR Qubec Capital Management Inc., overseen by a Board of Directors nominated by Xebec and the Fonds will be managing the partnership.
“We’re proud to once again partner with Xebec to increase the Fonds de solidarit FTQ’s impact in the fight against climate change. Renewable natural gas can accelerate the decarbonization of sectors such as transportation, home heating and industry, by supporting the circular economy through organic waste responsive management activities. This initiative also meets the Fonds’ objectives for a just energy transition by creating jobs and supporting local economies with additional revenue streams for farmers, municipalities, and industry. Xebec is a worldwide leader in renewable gases, and we are excited to have them as a partner in this project for the large-scale rollout of renewable natural gas facilities in Qubec,” says Dany Pelletier, Vice President for Investments – Structuring Capital, Energy and Environment, Fonds de solidarit FTQ.
“Our partnership with the Fonds de solidarit FTQ is a great demonstration of how local players can work together to foster the development of the renewable natural gas industry. When we launched this initiative a few years ago, we realized the need for new and better adapted structures to co-invest, develop and operate these facilities in a professional manner. Quebec has become a leading RNG province in Canada and currently has several RNG facilities in operation. Considering that new government regulations, such as the Clean Fuels Standard, will soon come into force and that the need for a higher renewable natural gas content will increase over the next few years, particularly in the utilities sector, we are pleased to partner with the Fonds de solidarit FTQ to accelerate the deployment of renewable gas infrastructures. Going forward, Xebec will seek to create more of these valuable financial partnerships in the field of RNG waste-to-energy conversion in Canada and will continue its mission to bring leading-edge technologies to the sector,” said Kurt Sorschak, President and CEO of Xebec Adsorption Inc.
A first-of-its-kind investment vehicle for renewable natural gas projects in Canada
This partnership is an innovative initiative that brings together industry participants (waste management companies, gas utilities, farmers, municipalities) and major financial institutions with a clear mandate to invest in organic waste treatment facilities for the production of renewable natural gas. The market for renewable natural gas in Canada is still in its infancy. In this context, Xebec and the Fonds de solidarit FTQ view this partnership as an essential step to develop and promote the expertise and efforts needed to accelerate the replacement of fossil fuels while supporting sustainable and responsible long-term investment in a waste-to-renewable gas economy in Canada.
GNR Quebec Capital: in line with government objectives for GNR production and greenhouse gas emissions reduction
GNR Quebec Capital L.P. believes that it could play a significant catalyst role in helping to meet government objectives of reducing greenhouse gas emissions and increasing the use of renewable natural gas, while supporting existing developers.
Last March, the Quebec government’s 2020-2021 budget allocated $70 million to support RNG production and distribution up to 2022. This measure follows the passing, in March 2019, of regulations mandating the minimum quantity of RNG to be delivered by natural gas distributors at 1% in 2020, and 5% in 2025.
For its part, the Government of Canada announced on April 24, 2020 an updated timeline for the introduction of the Clean Fuels Standard (CFS). The objective of this standard is to achieve an annual reduction in greenhouse gas emissions of 30 million tons by 2030. It will do so by stimulating investment and innovation in low-carbon-intensity fuels while enabling cost effective compliance. Xebec expects that the implementation of the ASC will create significant opportunities for the Canadian renewable gas industry over the next decade.